China's Luckin Coffee Inc, the explosive growth of which was derailed last year by accounting fraud, has said that it is seeking protection under Chapter 15 of the US Bankruptcy Code.
The coffee chain said that the Chapter 15 petition, which would facilitate the restructuring of its debts, is not expected to materially impact its day-to-day operations, and that its stores remain open.
Chapter 15 bankruptcy allows a foreign debtor to shield assets in the United States.
Get a FREE Digital Subscription!Enjoy full access to Hospitality Ireland, our weekly email news digest, all website and app content, and every digital issue.
Xiamen-based Luckin had positioned itself as an ambitious home-grown challenger to US coffee giant Starbucks Corp, but said last April that as much as 2.2 billion yuan ($340 million) in 2019 sales had been fabricated.
Luckin delisted from Nasdaq at the end of June of last year after admitting to accounting fraud.
In December, it agreed to pay the US Securities and Commission a $180 million penalty to settle accounting fraud charges for "intentionally and materially" overstating its 2019 revenue and understating a net loss.
Meeting Ongoing Business Obligations And Paying Suppliers And Staff
The company said that it continues to meet its ongoing business obligations and is paying suppliers and staff.